supplies to SEZ unit

[Mr Rao]

Dear experts

One manufacturing unit is supplying goods and services to SEZ. After GST coming into existence, the exporters need to pay GST on their supplies to GST and to overcome the same they intend to file LUT with the department. But as per the Notification No.16/2017-Central Tax Dt.7.7.2017, CBEC specified certain condition and safeguards for the registered persons to supply goods or services for export without payment of integrated tax for furnishing LUT in place of Bond. As per one of the conditions, the exporter who received due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than one crore rupees in the preceeding financial year is eligible for submission of LUT. Whether an exporter who supplies to SEZ and gets export turnover of 1 crore in indian currency eligible for LUT or not ? Pl.clarify.

AI Summary

SEZ Suppliers Ineligible for LUT: Supplies Considered Realizations, Not Remittances per Notification No.16/2017 A manufacturing unit supplying goods and services to a Special Economic Zone (SEZ) is inquiring about the eligibility for filing a Letter of Undertaking (LUT) to avoid paying Goods and Services Tax (GST) on exports. According to Notification No.16/2017, exporters must have received foreign inward remittances of at least 10% of export turnover, not less than one crore rupees in the previous financial year, to qualify for LUT. One response clarified that supplies to SEZ are considered realizations, not remittances, thus not qualifying for LUT. Another response suggested referring to a specific GST circular for further clarification.